Excess Flood Insurance: What Is It? Who Needs It?

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Excess flood insurance is a kind of private flood insurance policy that extends your limits beyond the those of government-sponsored National Flood Insurance Program (NFIP) coverage. Homeowners whose houses would cost more to rebuild than the NFIP flood insurance limit of $250,000 should consider adding excess flood insurance, especially if they live in a high-risk flood zone.

Who Needs Excess Flood Insurance?

If you own a high-value home that would cost more than $250,000 to rebuild, you may be required to buy excess flood insurance by your mortgage lender.

Flood insurance in general is required for homeowners if their residences are located in special flood hazard areas (SFHAs) and have federally backed mortgages. If this describes you, every lender will require you to carry flood insurance that covers the smallest of these three:

  • The cost to completely rebuild your home
  • The amount remaining on your mortgage
  • $250,000, which is the coverage limit for NFIP insurance

However, if your home has a rebuild cost (or a mortgage) of more than $250,000, your lender may require that you buy additional coverage beyond the NFIP maximum. It's not a legal requirement, so not all lenders will insist that you buy excess flood insurance. You may find a lender that will provide you with a mortgage, even if NFIP flood insurance doesn't completely protect you.

Even if you're not required to buy excess flood coverage, it may be worth the extra expense, especially if you live in an area at a high risk for flooding. Special flood hazard areas have a 26% chance of flooding over the course of a 30-year mortgage. If your home is completely destroyed and the $250,000 is not enough to cover the cost to repair or rebuild your house, you'll be on the hook for the remaining costs. Carefully consider the risks against the price of coverage before deciding whether you should buy excess flood coverage.

Who Doesn't Need Excess Flood Insurance?

Most people do not need excess flood insurance. In particular, you don't need it if your home's replacement value is less than $250,000, in which case you can get sufficient coverage through the NFIP alone. Additionally, we don't recommend excess flood coverage if your residence is not at a high risk of flooding, as the policy can be quite costly.

How Are Excess Flood Insurance Rates Determined?

Excess flood insurance rates are set similarly to regular flood insurance prices. An excess flood insurance carrier will charge a different amount depending on the coverage limits you choose, whether you select coverage up to actual cash value or replacement cost value, and the overall flood risk of your home. Flood risk is a complex formula based on several criteria. These include:

  • Elevation of your home above base water level
  • Distance from a body of water
  • Foundation structure (e.g., basement, crawl space, slab)
  • Elevation of lowest point in your home relative to ground level
  • Home construction material

Unlike NFIP flood insurance, every excess flood insurance provider sets its own rates. This means prices will vary from company to company, and you should check with several carriers to find the cheapest price for coverage.

What Does Excess Flood Insurance Cover?

Excess flood insurance covers you for the same type of damage and expenses covered under regular NFIP flood insurance. This includes repair or replacement of the structure and essential systems of your home if it is damaged due to flooding, whether the flooding is from a rainstorm, tsunami, hurricane or other cause. Excess flood insurance also pays for personal property in your home, such as clothing, furniture and electronics. However, keep in mind that personal property coverage in NFIP insurance is subject to a separate $100,000 limit. Additionally, there are often restrictions for items kept in a basement, as they are more likely to be damaged during a flood.

Some excess flood insurance providers may also go beyond what's covered under the NFIP program. This might include reimbursing you for loss of income, additional living expenses (ALE) coverage, and even costs of flood prevention, such as sandbags. However, availability of these coverages varies by insurance provider, so check with multiple insurers if there is a specific coverage you need.

Excess Flood Insurance Coverage Limits

There is no legal maximum coverage limit for excess flood insurance. As such, the maximum amount of coverage that a certain excess flood insurance provider may offer is up to each company to decide. Maximum coverage limits can go up to millions of dollars. For instance, Chubb insurance offers up to $15 million of combined coverage for your home and its contents.

An Alternate Option: Completely Private Flood Coverage

For homeowners who want or need coverage beyond the $250,000 NFIP limit, one alternative to buying NFIP coverage and supplementing it with an excess flood policy is a completely private flood insurance policy. Buying a completely private policy and a combination NFIP/excess coverage policy carry many of the same benefits, but there are some differences to consider.

One of the most important benefits of a private-only policy over an NFIP/excess combination is that private policies have a shorter waiting period—or no waiting period at all. You may also find that a single flood policy from a private insurer has cheaper rates than separate private and public policies. Another perk is the reduced complexity of having to manage only one policy: There's only one bill and only one claim to make.

On the other hand, purchasing excess flood coverage and NFIP coverage instead of a single private policy allow you to reap the benefits of both a private and government-backed flood insurance policy. For example, the $250,000 allotment you have through the NFIP can't be canceled or nonrenewed because of high risk. Plus, the government sets NFIP rates using a formula. By choosing a public/private combination, you're also guaranteed to meet your lender's flood insurance requirements.

Most importantly, both options will allow you to cover the entire value of your home, often up to limits of millions of dollars. We recommend that homeowners considering excess flood coverage collect quotes from multiple insurers, for both an excess policy and a totally private one, and consider which option more closely aligns with their needs.

NFIP/Excess flood insuranceCompletely private policy
Cancellation due to flood riskNFIP portion of policy won't be canceled or nonrenewed by insurer; excess policy may be canceledPolicy might be canceled or nonrenewed at insurer's discretion
How are rates set?NFIP portion of policy rates set by government; excess set by private lenderRates set by private insurer; may be higher or lower than government rates
How many policies?Two separate policies to keep track ofOnly one policy to keep track of
Waiting period?30-day waiting period0- to 14-day waiting period (depends on insurer)
Do they meet lender flood requirements?Guaranteed to meet your lender's flood insurance requirements, if it has anyMay or may not meet lender's flood requirements

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